Global economy forecast to grow 3.5% in 2020

THE global economy is projected to grow at 3.2% in 2019 and forecast to improve to 3.5% in 2020, according to the Economic Outlook 2020.

Global economy this year is supported by growth in several advanced economies.

However, global economic growth in 2020 is expected to be supported by stronger gross domestic product (GDP) performance in emerging markets and developing economies (EMDES).

Growth in EMDES is anticipated to improve at 4.7% in 2020 compared with 4.1% this year, as growth in major EMDES is expected to rebound after recovering from the effects of financial market pressures.

World trade growth is expected to ease to 2.5% this year amid deepening Us-china trade tensions and improve to 3.7% in 2020, backed by robust GDP growth in EMDES.

Meanwhile, growth in advanced economies is expected to ease further from 1.9% in 2019 to 1.7% in 2020, mainly due to the ongoing trade restrictive policies.

The global economy is experiencing a broad-based slowdown and risks are tilted to the downside, resulting from unresolved trade tensions, policy uncertainties and weakening business confidence.

The continued escalation of the trade dispute as well as broadening tariff hikes to other countries may significantly hamper global growth prospects.

Moreover, exposure to financial vulnerabilities due to prolonged low interest rates may weigh on growth.

In addition, existing political instabilities, humanitarian crises as well as geopolitical and social tensions, are among the major factors that contribute to the downside risks.

The US is expected to register solid growth in 2019.

However, this growth is projected to slow down in 2020 due to the winding down effect of its fiscal stimulus as well as ongoing restrictive trade policies.

Growth in the eurozone is expected to moderate in 2019 due to weaker industrial production and business confidence amid slower external demand.

The eurozone economy is projected to pick up slightly in 2020 as industrial activities regain momentum.

The uncertainties caused by Brexit continues to affect business confidence and domestic demand in the UK.

Nonetheless, growth in 2020 is expected to stabilise after Brexit on October 31, 2019.

China’s GDP is expected to expand at a slower pace in 2019 and moderate further in 2020, mainly due to structural slowdown and the escalation of trade tensions.

On the other hand, global inflation is projected to be at 3.6% in both 2019 and 2020.

In 2020, inflation in advanced economies is expected to record 2% (2019: 1.6%), while in the EMDES, it is projected to record 4.7% (2019: 4.8%), following slower wage growth.